A pensions workgroup set up by the National Association of Pension Funds (NAPF) today launched a public consultation seeking views on the parameters of a new defined contribution (DC) Code of Conduct on charges.

The group, made up of employer representatives, pension providers, pension industry leaders, union and consumer groups, will use the feedback to create the final Code, which is to be launched late this summer. It says the Code on the charges of workplace pensions could help employers choose the best pension for their staff.

There are currently big gaps in regulation and practice which make it difficult for employers to compare charges between pension schemes and to assess value for money.

The new Code could help employers who are new to pensions to secure the best deal when they start complying with rules to automatically enrol their staff into a pension.

Joanne Segars, chief executive of the NAPF, said: "We need to boost faith in pensions, but charges are a big concern for many people and often the information on offer is unclear. People need to see what is being charged and why, and in a language they understand."

Jamie Fiveash, director of customer solutions at B&CE, said: "Charges across pension schemes are horrendously complicated and diverse. There're no consistent regulations which govern annual management charges (AMCs), which are often quoted as the scheme or sole charge, but can be just the tip of the iceberg in terms of total charges suffered."

Managing director scheme development at NEST, Helen Dean, stressed the importance of understanding the charges in the light of auto-enrolment: "It is important to employers that their workers can understand what they're being charged, why, and the potential impact on their final pot, particularly when these workers are being automatically enrolled.

Current regulation requires contract-based defined contribution pension schemes to offer information to members about charges, but the same requirements do not apply at the point employers pick pension schemes for their employees.

The working group members include the likes of the Association of British Insurers (ABI), Confederation of British Industry (CBI), Heineken, Legal and General, NOW:Pensions, Trades Union Congress (TUC) and Whitbread.

First published 16.05.2012

azeevalkink@wilmington.co.uk